risks
Article
Cryptocurrency as an Investment: The Malaysian Context
Shangeetha Sukumaran 1 , Thai Siew Bee 1, *






Citation: Sukumaran, Shangeetha,
Thai Siew Bee, and Shaista
Wasiuzzaman. 2022. Cryptocurrency
as an Investment: The Malaysian
Context. Risks 10: 86. https://
doi.org/10.3390/risks10040086
Academic Editor: Dimitrios Koutmos
Received: 16 February 2022
Accepted: 8 April 2022
Published: 14 April 2022
Publisher’s Note: MDPI stays neutral
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Copyright: © 2022 by the authors.
Licensee MDPI, Basel, Switzerland.
This article is an open access article
distributed under the terms and
conditions of the Creative Commons
Attribution (CC BY) license (https://
creativecommons.org/licenses/by/
4.0/).
Risks 2022, 10, 86. https://doi.org/10.3390/risks10040086
and Shaista Wasiuzzaman 2
1 Faculty of Management, Multimedia University, Persiaran Multimedia, Cyberjaya 63100, Malaysia;
1151103718@student.mmu.edu.my
2 School of Business, University Teknology Brunei, Bandar Seri Begawan BE1410, Brunei; dr.shaista@utb.edu.bn
* Correspondence: sbthai@mmu.edu.my
Abstract: Cryptocurrency is gaining popularity worldwide, with some countries already starting to
regulate and accept cryptocurrency in their financial services. Malaysia’s Securities Commission (SC)
announced in October 2021 that over MYR 16 billion (USD 3.85 billion) involving digital assets and
cryptocurrencies were traded between August 2020 and September 2021. Since cryptocurrencies are
issued by private corporations and are technically beyond the federal government’s control, criminals
may use them for illegal reasons such as money laundering and terrorist funding. Consequently, it is
vital to examine why investors are engaged in cryptocurrency in the first place. This study aims to
provide insight into Malaysian investors’ perceptions by evaluating the influence of perceived risk
and perceived value on their cryptocurrency adoption decision. The retail investors’ demographic
characteristics (gender, age, education, income, and investment experience) were analyzed as control
variables. Data were gathered using purposive sampling, and responses from 211 respondents from
various cities in Malaysia were used in the final analysis. Data were examined using Smart PLS
Structural Equation Modelling (PLS-SEM). Based on the finding’s, perceived value was found to have
a significant influence on cryptocurrency adoption. Meanwhile, perceived risk had no significant
influence on the adoption of cryptocurrency among the Malaysian investors.
Keywords: risk; cryptocurrency; investment; Malaysia; investors
1. Introduction
Globalization and the development of financial markets have increased people’s
ability to invest in securities and financial instruments as they are no longer bound by
national borders (Lim 2013). Cryptocurrency and the technology that underpins them,
namely blockchain technology, are developing into popular investment instruments and are
transforming the way financial services operate and accelerating the pace of digitalization.
Additionally, when the world was struck with a global health catastrophe in the form of the
COVID-19 pandemic that resulted in the implementation of quarantines and restrictions
worldwide, the future of financial services could not have evolved sooner.
Nevertheless, the world economy has suffered as a result of the pandemic, causing a
devastating downturn that affected most financial markets. Accordingly, investors began
looking for an alternative and recognized the potential of the digital economy in the wake
of restrictions and movement control. Given the fact that almost all the world’s population
was restricted to their homes as a result of lockdowns, consumers became more engaged
in online businesses. Although digital currencies were not used as a medium of payment,
many investors switched their investments to cryptocurrencies in the hope of profiting,
despite the fact that they were not backed by economic fundamentals. However, Malaysian
regulators and policymakers seem to be unsure of how to approach this new innovation
and how to properly utilize this new technology (Nawang and Azmi 2021).
Alternatively known as digital or virtual currencies or tokens, cryptocurrencies are
developed or mined and privately traded for transactions by individuals or organizations.
However, regulators in many countries do not recognize cryptocurrency. Despite the total
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Risks 2022, 10, 86 2 of 17

ban on the usage of cryptocurrency in many countries, cryptocurrency is gaining popu-

larity in the recent years as a number of countries have started accepting and regulating
cryptocurrency (Global Legal Research Center 2018). Additionally, the interest in cryptocur-
rency is gaining momentum as many blockchain start-up companies are using cutting-edge
blockchain innovation in developing economies to enhance the efficiency of the current
banking system.
In the context of Malaysia, the government made its position on cryptocurrency clear
in 2019 by adopting the cryptocurrency law which took effect on 15 January 2019. The
Capital Markets and Services Order 2019 categorizes all digital coins, tokens, and crypto
assets as being protected and subjected to the Securities Commission Regulations. Anyone
involved in unlicensed initial coin offerings or digital asset exchanges in Malaysia could
face a ten-year prison sentence and a RM10 million fine (Zmudzinski 2019). Additionally,
Malaysia’s Ministry of Finance reaffirmed the government’s objective of encouraging
continuing growth in digital asset creation and peer-to-peer lending while protecting
investors in digital asset trading in certain circumstances. In achieving this goal, the
Securities Commission Malaysia (SC) and Bank Negara Malaysia (BNM) began working
closely together in December 2020 to establish cryptocurrency and digital asset policies and
regulations that would foster sustainable innovation while managing any potential risks
connected with this developing sector.
In Malaysia, the adoption of cryptocurrency in general, including its adoption by
investors, is still in its early adopter phase (Ku-Mahamud et al. 2018; Yeong et al. 2019;
Yusof et al. 2018). In an effort to foster innovation and creativity, Bank Negara Malaysia
(BNM) does not prohibit Bitcoin trading even though digital currencies are not legal cash
in Malaysia. Thus, the question of whether the digital currency should be regulated in
Malaysia needs to be addressed. Malaysian regulators and policymakers are presently
working on how to approach this new innovation and how best to utilize this new technol-
ogy. Accordingly, having better knowledge about Malaysian retail investors’ perceptions of
the risks and returns would help policymakers and regulators to make better decisions on
how to deal with cryptocurrency investments. This is essential since governments need to
engage carefully in this area by avoiding both over-and under-regulation since both would
hinder the development of digitalization. Therefore, knowing retail investors’ perception
of risk and value in relation to cryptocurrency investment is crucial as such knowledge
would be able to provide an insight into public perception of this new emerging form of
investment.
This study, therefore, aimed to gain insight on cryptocurrency investment based on
the perceptions of Malaysian retail investors. Consumer behavior theory was adopted in
this study to understand investors’ perceptions by studying factors of perceived risk and
perceived value. Additionally, demographic factors (gender, age, education, income, and
investment experience) were included as control variables. Specifically, this study aimed to
gain insight on investors’ perceptions of cryptocurrency investments and their intention
to adopt cryptocurrency as an investment vehicle. The findings of the study showed that
perceived value, gender, and age had an influence on adoption. In contrast, perceived risk,
education, income, and investment experience were found not to have any influence on
adoption.
This paper is organized as follows. It begins with an introduction section, which is
followed by the literature review and the methodology sections. The research findings and
discussion of the results are provided in the subsequent section. The concluding section
then presents the study’s limitations and highlights possible future studies.

2. Literature Review
The decentralized and anonymous (or pseudonymous) features of cryptocurrency
have made it easy for criminals to use it to engage in a variety of illegal activities including
money laundering and terrorism financing. Additionally, the anonymity exhibited by
cryptocurrencies can lead to consumers being manipulated into believing they are engaging
Risks 2022, 10, 86 3 of 17

with legitimate firms, only to discover they have been victimized. Given their anonymity,
terrorist funders have even used this platform to finance terrorists as their transactions
cannot be traced back to them. The uncovering of Silk Road, a black-market network
that accepts Bitcoin for the trade of illegal drugs (Daniels 2014), is one such example of
how cryptocurrencies could be easily used for illicit transactions. Such a scenario has
undoubtedly raised legal concern over the monitoring and regulating of cryptocurrency.
Despite the fact that cryptocurrency is highly volatile and lacks a regulatory framework,
research on the primary reasons for investing in cryptocurrency is still scarce (Gupta et al.
2020). Nevertheless, research on the phenomenon is currently gaining momentum.
Zulhuda and Sayuti (2017) found that government attitudes and perceptions toward
cryptocurrency vary across countries. They argued that Malaysia has so far embraced
a “minimalist” approach to cryptocurrencies while possibly adopting a “wait and see”
approach toward it. As a result, the business and activities of digital currency exchanges are
not protected by the market norms that are applicable to other financial organizations that
are regulated. For this reason, Zulhuda and Sayuti (2017) maintained that the government
should conduct a closer inspection and consider implementing an industrial self-regulatory
system to handle and manage key elements and risks. In a study conducted by Huang
(2019), in China it was found that many of the respondents were keen and wanted to
buy Bitcoin; they also wanted the government to get involved. More than 50% of the
respondents in Huang’s study reported that they understood the higher return from
cryptocurrency investments, especially that of Bitcoin; however, many were unaware of its
risks and perceived values.
In general, cryptocurrency is viewed as a speculative investment instead of a long-term
investment (AFM 2018). According to Ryu and Ko (2019), cryptocurrency as a speculative
investment activity is a natural response to an unbalanced interplay between high and low
impulses. The findings of his study, which was conducted in South Korea, imply that Bitcoin
speculation uses a decision-making process similar to that used by other unplanned or risky
IT behaviors. Inci and Lagasse (2019) demonstrated that cryptocurrencies’ contributions
to an ideal portfolio are dynamic and thus evolve over time. Based on their findings,
the authors concluded that popular cryptocurrencies play an important role in portfolio
construction and investment, in addition to the original purpose of growing money. Their
findings also indicate that social commerce promotes trust in cryptocurrency usage and
willingness to use cryptocurrency.
Despite the lack of authoritative statistics and official records on the adoption and
use of cryptocurrencies in Malaysia, it is claimed that Bitcoin has been transacted in the
nation since 2012, with many relying on posts on BitcoinMalaysia.com (Nawang and Azmi
2021). Nevertheless, a detailed examination of the historical evolution of cryptocurrencies
from 2012 to the present reveals that the currency’s promising future has yet to be properly
acknowledged by the Malaysian public. It has been argued that the concern over loss
or theft, fraud or unauthorized use, wallet or exchange failure, inadequate disclosure
as well as issues of transaction processing are some of the potential risks that may have
contributed to Malaysian consumers’ slow adoption of cryptocurrencies (Zahudi and Amir
2016). This is supported by Nawang and Azmi (2021) who reasoned numerous factors
may have contributed to the delayed adoption of these cryptocurrencies in this country.
However, they maintained that most of these are centered on concerns about security and
consumer protection. The Malaysian government has taken a “minimalist” approach to
cryptocurrency regulation to avoid stifling innovation and the growth of cryptocurrency in
the country (Nawang and Azmi 2021). In doing so, it could be argued that the government
has taken a warm approach toward cryptocurrency regulation in Malaysia (Durgha 2018).
In this study, perceived risk and perceived value were identified as two important
factors influencing the adoption of cryptocurrency in Malaysia. Perceived value was
chosen to evaluate if Malaysian investors have a positive perception of the returns and
gains from cryptocurrency investment while perceived risk was used to evaluate the
negative perception of investors toward cryptocurrency investment.
Risks 2022, 10, 86 4 of 17

2.1. Hypotheses Development

This study extended upon the research on consumer behavior in the formulation of
its hypotheses. The purpose of this study was to examine retail investors’ perceptions of
risk and value in relation to cryptocurrency investment. This research adopted consumer
behavior theory as the theoretical framework, with an emphasis on marketing and the
underlying perceptions that influence consumers’ purchasing decisions.
Although there have been a lot of changes in traditional and behavioral finance, only
a small number of studies have examined the range of key factors in the field of consumer
behavior. This is surprising given the close relationship between behavioral finance and
consumer behavior since both have examined individual decision-making using aspects of
psychology and sociology. As a result, it was deemed relevant and beneficial to investigate
the influence that consumer behavior factors may have on retail investors’ actions toward
investing in cryptocurrencies. For this reason, this study used consumer behavior theory to
understand retail investors’ intention to adopt cryptocurrency as an investment.
Consumer behavior is the examination of individuals, groups, and organizations as
well as the processes by which they select, secure, use, and dispose of products and services
(Gabbott 2008). Consumer behavior started its growth phase in the 1960s when numerous
concepts were integrated into comprehensive measures and models of buyer behavior.
Nicosia and Francesco’s (1966) Consumer Decision Process Model, Engel et al.’s (1968)
Consumer Behavior Model, Howard and Sheth’s (1969) Theory of Buyer Behavior, Fishbein
and Ajzen’s (1975) Theory of Reasoned Action, and Ajzen’s (1985) Theory of Planned
Behavior are just a few examples of well-known models.
An extensive list of potential obstacles confronts consumers when they are attempting
to decide on what to buy, including discovering the need for and the availability of new
products or services, learning about alternate selections, anticipating possible future events
connected to the purchase, and contemplating possible purchase outcomes (Peter and Olson
1993). Given that an investor’s decision-making process is similar to that of a consumer,
it may be beneficial to explore the impact of consumer behavior structures on investors’
intentions to invest in the cryptocurrency market. This is especially essential for retail
investors who are more likely to fall victim to biases and make less “rational” decisions
because of the lack of knowledge and information available to them. Consequently, as retail
investors usually have a limited understanding of financial markets, they tend to seek more
information than professional institutional investors (Black 1992). As a result, the area of
consumer behavior may provide new insights into the elements that impact retail investors’
decisions about which investment products to use to meet their goals. The constructions
that focus on risk, uncertainty, and opportunity for development are expected to have a
major influence on retail investors’ decisions.

2.2. Independent Variables

2.2.1. Perceived Risk
To quantify risk, one must consider both its defining characteristics and the probability
of unfavorable outcomes and consequences. According to Gratt (1987, p. 98), estimation
of risk is usually based on “the expected value of the conditional probability of the event
occurring times the expected consequence of the event given that has occurred”. Consumer
decision-making models have included perceived risk as an explanatory variable (Srini-
vasan and Ratchford 1991). Consumer decision-making is strongly influenced by perceived
risk (Peter and Tarpey 1975; Conchar et al. 2004). Taylor (1974) proposed that if the level of
perceived risk is determined, it is easy to determine how people behave in connection to
that risk. Thus, it becomes possible to comprehend investors’ intentions and motivations
when their perception of risk is understood.
Perceptions of risk have been studied in a variety of contexts, including product and
service assessments, as well as the adoption of new technologies and services. Studies
have shown that risk perceptions, which are beliefs or assessments of the associated risks
associated with a particular behavior, can have an effect on how people act and think. Risk
Risks 2022, 10, 86 5 of 17

perceptions associated with making a poor or inappropriate decision lower a consumer’s

possibility of buying an alternative (Jarvenpaa and Todd 1996–1997; Bhatnagar et al. 2000;
Vijayasarathy and Jones 2000). Consumers may encounter a higher risk when purchasing in-
vestment products than when purchasing other products as the financial value is frequently
higher and there are no guarantees or options for returning a purchase and receiving a
full refund. Weber and Milliman (1997) discovered in their study that participants who
perceived less risk in behavior were likely to have a more positive attitude toward the
behavior. Additionally, Arias-Oliva et al. (2019) found that risk was not a significant factor
in influencing cryptocurrency use in Spain and argued that this could be due to the fact
that most of the respondents considered the risk associated with cryptocurrency to be low.
Faqih (2016) defined perceived risk in behavioral research as consumers’ perception of
the degree of uncertainty and possible negative effects of using or purchasing a product.
Kannungo and Jain (2004) remarked that perceived risk is a factor in people’s purchase
intentions and how likely they are to use a new technology. Recent studies have looked
at how perceived risk affects people’s desire to use financial technologies, and the results
have been contradictory. Mendoza-Tello et al. (2018), for instance, indicated that perceived
risk has no effect on the decision to adopt cryptocurrency for electronic payments. In this
present study, perceived risk is included to understand retail investors’ perception of risk
when adopting cryptocurrency investment. Based on the understanding of cryptocurrency
as a new financial technology with possible risks, the following hypothesis was therefore
suggested.
Hypotheses 1 (H1). Perceived risk has a negative influence on cryptocurrency adoption among
investors in Malaysia.

2.2.2. Perceived Value

Perceived value is known as a measure of the potential gain or loss from using
a particular product or service (Zeithaml 1988). Perceived value is a highly complex
factor that is examined in two areas, namely perceived usefulness and enjoyment of an
individual (Hsu and Lin 2015; Shao et al. 2014). In technology adoption, usefulness is
listed as a motivator for people to want to use a certain technology. Many studies refer
to the evaluation of the intention to implement a new technology as the advantages an
individual is able to gain from the given technology and how valuable it is to the individual
(Shao et al. 2014; Pham and Ho 2015). As a result, people’s intentions to use blockchain
technology are expected to be impacted by their perceptions of its use and enjoyment
(Yang et al. 2016). Several researchers have found that usefulness and enjoyment influence
behavioral intention (Alalwan et al. 2018; Baabdullah 2018). The impact of perceived value
as an independent variable and behavioral intention as a dependent variable has also
been presented in the literature (Zeithaml 1988; Pei et al. 2015; Abramova and Böhme
2016). Individuals’ expectations for blockchain to offer higher perceived value could
theoretically increase their behavioral intention to use it if perceived value is considered a
multidimensional factor. Although cryptocurrencies have no intrinsic worth, the mindset
of investors concerning high returns is much more crucial in recognizing higher moments
of return predictability (Cheah and Fry 2015).
Trading and speculating on exchange markets are achieved by fluctuations in exchange
rates between cryptocurrencies and fiat currencies. Many consumers tend to purchase
cryptocurrencies not to use them to pay for goods or services, but rather to take advantage
of the high price volatility and to hold on to it until the exchange rates increase (Böhme
et al. 2015). This fact applies to the ongoing debate in academia and practice about whether
cryptocurrencies should be considered a digital currency or simply an investment tool
(Glaser et al. 2014; Hur et al. 2015). Although investment opportunities affect people’s
decisions to use cryptocurrencies, Hur et al. (2015) found that the speculative nature of the
currency is not the only reason for adoption. Mendoza-Tello et al. (2018) found that per-
ceived usefulness is the most important factor in people’s intentions to use cryptocurrencies
Risks 2022, 10, 86 6 of 17

for electronic payments. They also found that individuals who believe cryptocurrencies are
easy to use are more inclined to use them. By the same token, Shahzad et al. (2018) also
discovered that perceived usefulness and perceived ease of use have a significant influence
on the intention to adopt Bitcoin in China.
According to Polasik et al. (2015), cryptocurrencies’ success particularly that of Bitcoin,
as well as media coverage of cryptocurrencies and the total number of transactions all have
an impact on their returns and profitability. Investors are drawn to cryptocurrencies as an
investment option because of their perceived attractive characteristics, exceptionally high
market volatility, high average return, accessibility even on weekends, and low correlation
with traditional assets, which are all characteristics that have major diversification advan-
tages (Briere et al. 2015). Rufino (2019) in his study on the risk-return profile of Bitcoins
concluded that the long-run daily return on Bitcoin is highly significantly positive and the
returns are generally symmetric. The high return rate can be used to evaluate the perceived
value of cryptocurrency, which includes the perceived speculative value aspect. Therefore,
the following hypothesis was formed for this study.
Hypotheses 2 (H2). Perceived value has a positive influence on cryptocurrency adoption among
investors in Malaysia.

2.2.3. Control Variable

Control variables are able to explain individual differences in cryptocurrency adoption
intentions (Lee et al. 2019). Previous research has reported that an individual’s gender, age,
income level, previous education, and investment experience all influence their investment
decision (Xi et al. 2020; Jia et al. 2021; Liao et al. 2017). In this study, the control variable
was included to examine the possible differences in the respondents’ gender, age, income,
education, and investment knowledge that might influence their intention to invest in
cryptocurrency.

3. Methodology
3.1. Data Collection
This study was a quantitative study that focused on Malaysian retail investors’ percep-
tions of cryptocurrency investment. Identification and access to the respondents were made
through a cryptocurrency-focused social media group. Purposive sampling and respondent-
driven sampling were adopted where respondents with prior investment knowledge of
cryptocurrency were considered in the sampling frame. The main criterion for sampling
was that the respondents must have knowledge of cryptocurrencies although they may
not have invested in these currencies before. In order to identify respondents who fulfilled
the sampling criteria described above, two questions on the respondents’ knowledge in
and experience with cryptocurrencies were posed. Each question was constructed with
a five-point Likert response option. The first question asked the respondents the length
of time that they have been involved in cryptocurrency investment with the response
options ranging from 1 (I have never invested in cryptocurrency investment) to 5 (More
than 3 years). The second question asked the respondents the depth of their knowledge of
cryptocurrency where the response options ranged from 1 (None) to 5 (A great deal).
This study also used an ordinal scale to measure the dependent and independent
variables. The dependent variable in this study was “adoption” while the independent
variable was “perception” which included perceived risk and perceived value which were
adopted from the consumer behavior theory. For the control variables, five demographic
factors were analyzed, namely age, gender, income, education, and investment experience.
In the questionnaire, a five-point Likert scale was employed to identify the respondents’
level of agreement or disagreement with the statements that measured each construct.
The value for the scale ranged from 1 to 5, with 1 representing “strongly disagree” and
5 representing “strongly agree”. The questionnaire was divided into five sections. Section 1
introduced the purpose and the objective of the research to provide some background
Risks 2022, 10, 86 7 of 17

information about the research to the respondents. Section 2 contained the consent form
which sought to obtain informed consent from the respondents for their participation
in the research. Section 3 contained questions related to the respondents’ demographic
information which covered age, gender, income, education level, and investment experience.
Section 4 focused on the respondent’s investment knowledge and experience. Section 5
contained questions on the two main factors of perceived risk and perceived value.
Data were collected over a period of two months, from September 2021 to November
2021. Due to the anonymity nature of cryptocurrency, the respondents were approached
using various social media platforms by identifying the retail investors’ cryptocurrency-
focused social media group. Data were collected through an online survey questionnaire
which was created using a Google form. The Google form link to the questionnaire was
then posted on the targeted social media platforms. G*Power was used to calculate the
sample size requirement and the calculation produced a minimum of 184 respondents. At
the end of the sampling period, a total of 280 questionnaires were returned. However, after
conducting the filtering process, it was found that only 211 questionnaires were completely
answered.

3.2. Measurement of Variables

In this study, the quantitative approach was used where an online survey questionnaire
was employed as the data collection instrument. The variables in this study were measured
using an ordinal scale. The dependent variable “adoption” and independent variables
of “perceived risk” and “perceived values” were measured based on self-report. Table 1
presents the items for the constructs and their sources.

Table 1. Items for construct and their sources.

Item Questions Source

ADOP1 How likely are you to invest in cryptocurrency this year?
ADOP2 I have plans to invest in cryptocurrencies in the future
There is a high probability I will invest in cryptocurrency
ADOP3
next time
ADOP4 I will encourage others to invest in cryptocurrencies
PR1 Investing in cryptocurrencies is risky
There is too much uncertainty associated with investing in
PR2
cryptocurrencies
Compared with other currencies/investments,
PR3 Mahomed (2017), Faqih (2016), Shim et al.
cryptocurrencies are riskier
Using cryptocurrency in trading helps me improve the (2001), Gupta et al. (2020)
PV1
effectiveness, profitability, and investment of my money
I find that trading in cryptocurrencies can save money as it
PV2 allows me to invest it quickly and inexpensively with lower
transaction costs
Using cryptocurrency helps me improve my financial
PV3
performance because I have total control over my money
PV4 I feel satisfied with my cryptocurrency investment decisions
Investing in cryptocurrencies will increase opportunities to
PV5
achieve important goals for me

Additionally, five demographic factors (gender, age, education level, income, and
investment experience) representing the control variables were added to the framework.
A five-point Likert scale was used as the response option with (1) Strongly disagree,
(2) Disagree, (3) Neutral, (4) Agree, and (5) Strongly agree. The results of the analysis on
the investors’ investment profile are discussed in the following section.
Risks 2022, 10, 86 8 of 17

4. Results of Analysis on Investor’s Investment Profile

In this section, the results of the analysis conducted on the data collected are presented.
Table 2 presents the results of the frequency analysis performed on the demographic data
of the respondents.

Table 2. Investors’ demographic profile.

Respondent’s Profile Total No. of Respondents: 211

Characteristics
(Retail Investors) Frequency (%)
Male 157 74.4%
Gender
Female 54 25.6%
18–24 44 20.9%
25–34 66 31.3%
Age 35–44 38 18.0%
45–54 33 15.6%
55+ 30 14.2%
Bachelor’s degree 91 43.1%
Diploma 45 21.3%
Master’s degree 37 17.5%
Education Level High school 15 7.1%
Doctoral degree 10 4.7%
Professional degree 10 4.7%
No formal education 3 1.4%
Below RM2000 43 20.4%
RM2001–RM4000 47 22.3%
RM4001–RM6000 43 20.4%
Income
RM6001–RM8000 21 10.0%
RM8001–RM10,000 22 10.4%
Above RM10,000 35 16.6%
Private sector 100 47.4%
Self employed 42 19.9%
Student 26 12.3%
Employment
Government servant 20 9.5%
Retired 13 6.2%
Others 10 4.7%
More than 3 years 80 37.9%
Investment
1–3 years 73 34.6%
Experience
Less than 1 year 58 27.5%

Responses from a total of 211 respondents were analyzed for their demographic
factors. Most of the respondents or 157 respondents (74.4%) were male while the rest, i.e.,
54 respondents (25.6%), were female. Most of the respondents were from the age group of
25 to 34, with 66 respondents (31.3%) coming from this age group. This was followed by
respondents in the age group of 18 to 24, with 44 respondents (20.9%). Only 30 respondents
(14.2%) were from the age group of 55 and above. In terms of education level, the majority
of the respondents, i.e., 91 respondents (43.1%), were bachelor’s degree holders. This is
followed by diploma holders with 45 (21.3%) respondents. Only 3 respondents (1.4%)
reported having no formal education.
Concerning income, most of the respondents were from the income group of RM2001
to RM4000, with 47 respondents (22.3%) belonging in this group. The same number of
respondents, i.e., 43 respondents (20.4%), reported earning income below RM2000, and
between RM4001 and RM6000, respectively. Meanwhile, 21 respondents (10%) reported
earning an income of between RM6001 andRM8000, while 35 respondents (16.6%) were
in the highest income group of above RM10,000. The majority of the respondents, i.e.,
100 respondents (47.4%), were employed in the private sector, while 42 respondents (19.9%)
were self-employed. In relation to investment experience, 80 respondents (37.9%) reported
having investment experience of more than 3 years, followed by 73 respondents (34.6%)
having 1–3 years of investment experience and 58 respondents (27.5%) having less than 1
Risks 2022, 10, 86 9 of 17

year of experience. The next segment presents the analysis of the respondents’ investment
profile. The results of the frequency analysis on the respondents’ investment profile in
terms of their knowledge and experience are presented in Table 3, arranged in order of the
highest frequency of responses for each item.

Table 3. Investors’ investment profile.

Investor’s Investment Portfolio No. of Respondents %

Years of Investment Experience
I have never invested in cryptocurrencies 66 31.28%
Less than a year 65 30.80%
From 1 to 2 years 33 15.64%
More than 3 years 28 13.27%
From 2 to 3 years 19 9.00%
Portfolio Allocation
0–20% 108 51.18%
21–40% 59 27.96%
41–60% 26 12.32%
81–100% 9 4.27%
61–80% 9 4.27%
Depth in Knowledge of Cryptocurrency
A moderate amount 95 45.02%
A little 60 28.44%
None at all 29 13.74%
A lot 18 8.53%
A great deal 9 4.27%
Cryptocurrency Investment
I have never invested in cryptocurrency 66 31.28%
Invested in various cryptocurrency 145 68.72%
Bitcoin 97 45.97%
Ethereum 75 35.55%
Litecoin 36 17.06%
Tether 36 17.06%
XRP 79 37.44%
Uniswap 11 5.21%
Others 50 23.70%
Binance 49 23.22%
Polkadot 22 10.43%
Dogecoin 43 20.38%

The majority of the respondents or a total of 140 respondents (68.72%) reported having
prior experience of investing in cryptocurrencies. Sixty-six respondents (31.28%) stated
they had no experience in cryptocurrency investment. In terms of portfolio allocation, the
majority of the respondents, i.e., 108 respondents (51.18%), reported allocating between
0 and 20% for their investment portfolio. This is followed by 59 respondents (27.96%)
who allocated between 21 and 40%, 26 respondents (12.32%) allocating between 41 and
60%, 9 respondents (4.27%) allocating between 81 and 100%, and 9 respondents (4.27%)
allocating between 61 and 80% for their investment portfolio. When asked regarding their
knowledge of cryptocurrency, 95 respondents (45.02%) claimed to have a moderate amount
of knowledge in cryptocurrency. In contrast, only a small number of respondents, i.e., 9
respondents (4.27%), claimed to have a great deal of knowledge in cryptocurrency.

4.1. Structural Equation Modelling

The relationship between the two independent variables (perceived risk and perceived
value) and the dependent variable (adoption) was analyzed using SmartPLS 3 via SEM-PLS.
All the items manifested a reflective measurement model. The control variables (gender,
age, education, income, and investment) were measured using single-item constructs.
Figure 1 represents the measurement model of the data collected.
Risks 2022,10,
Risks2022, 10,86
x FOR PEER REVIEW 10
11ofof17
19

Figure1.1.Measurement
Figure Measurementmodel
modelassessment.
assessment.

Theendogenous
The endogenouslatent
latent variable
variable in this
in this model
model was adoption
was adoption while while the exogenous
the exogenous latent
latent variables
variables were perceived
were perceived risk andrisk and perceived
perceived value.
value. The The variables
control control variables were
were gender,
age, education,
gender, income, and
age, education, investment
income, and experience.
investment The latent variable
experience. for perceived
The latent variablerisk
for
contained
perceivedthree items (PR1,
risk contained PR2,
three and(PR1,
items PR3) PR2,
whileand
perceived value
PR3) while consisted
perceived of five
value items
consisted
(PV1, PV2,
of five PV3,
items PV4,
(PV1, andPV3,
PV2, PV5). PV4, and PV5).

4.2.
4.2.Validity
Validityand
andReliability
ReliabilityTest
Test
Firstly,
Firstly, the reflective measurementmodels
the reflective measurement modelswere
wereassessed
assessedusing
usingthe themeasurement
measurement
model evaluation. Table 4 presents the results of the indicator reliability,
model evaluation. Table 4 presents the results of the indicator reliability, internal consistency,
internal
convergent validity, discriminant validity, and VIF of the reflectively measured
consistency, convergent validity, discriminant validity, and VIF of the reflectively models.
measured models.
Table 4. Results of the validity and reliability test.
Table 4. Results of the validity and reliability test. Average
Composite
Outer Discriminant
Construct Items Reliability Variance Extracted VIF
Loading
(CR) (AVE)
Average Validity
Composite
ADOP1 Outer Variance Discriminant
Construct 0.895 Items Reliability VIF
ADOP2 0.94 Loading Extracted Validity
Adoption 0.947 (CR)
0.817 Established N/A
ADOP3 0.918 (AVE)
ADOP4 0.86
PR1 0.915 ADOP1 0.895
Perceived Risk PR2 0.918 ADOP2 0.909 0.94 0.769 Established 1.04
PR3Adoption 0.793 0.947 0.817 Established N/A
PV1 0.854
ADOP3 0.918
PV2 0.887 ADOP4 0.86
Perceived Value PV3 0.925 0.949 0.79 Established 1.21
PR1 0.915
PV4 0.857
Perceived
PV5 0.918 PR2 0.918 0.909 0.769 Established 1.04
Gender GENDER
Risk 1 1 1 Established 1.20
PR3 0.793
Age AGE 1 1 1 Established 1.57
Education EDUCATION 1 PV1 1 0.854 1 Established 1.30
Income INCOME 1 1 1 Established 1.50
PV2 0.887
Investment Perceived
EXPERIENCE 1 1
Experince PV3 0.925 0.9491 0.79 Established
Established 1.321.21
Value
PV4 0.857
PV5 0.918
 Education EDUCATION 1 1 1 Established 1.30
Income INCOME 1 1 1 Established 1.50
Investment
EXPERIENCE 1 1 1 Established 1.32
Risks 2022, 10, 86 Experince 11 of 17

The indicators’ reliability, internal consistency, convergent validity, discriminant

validity, and VIF of the reflectively measured models were all examined. The indicators’
The indicators’ reliability, internal consistency, convergent validity, discriminant va-
reliability was determined using the value of outer loadings. The values obtained were all
lidity, and VIF of the reflectively measured models were all examined. The indicators’
greater than
reliability was 0.708, suggesting
determined using the latent of
the value variables can explain
outer loadings. at leastobtained
The values 50% ofwere each
indicator’s variance. Next, internal consistency was measured using
all greater than 0.708, suggesting the latent variables can explain at least 50% of each composite reliability
(CR). Higher
indicator’s composite
variance. Next,reliability
internal values implywas
consistency higher levels of
measured reliability.
using compositeIn this model,
reliability
all of the items had values greater than 0.7, indicating that the measurement
(CR). Higher composite reliability values imply higher levels of reliability. In this model, items had a
common
all variance
of the items hadofvalues
at leastgreater
50%. Inthanterms0.7,ofindicating
convergent validity,
that all the valuesitems
the measurement for average
had a
common variance of at least 50%. In terms of convergent validity, all the values forvariation
variance extracted (AVE) were greater than 0.5, indicating that at least 50% of the average
of its items
variance are explained
extracted (AVE) were by the constructs.
greater than 0.5, indicating that at least 50% of the variation
Discriminant validity was analyzed
of its items are explained by the constructs. using Fornell and Larcker (1981) criterion where
the correlation of the constructs with
Discriminant validity was analyzed using all of the other
Fornellconstructs were(1981)
and Larcker foundcriterion
not larger than
where
their
the square root
correlation of AVE.
of the The cross
constructs loadings
with all or theconstructs
of the other indicator were
loadings
found onnot
thelarger
constructs
than
weresquare
their foundroot
to be higher
of AVE. Thethan
crossall the cross
loadings loadings
or the indicator with other on
loadings constructs. Therefore,
the constructs were
discriminant
found validity
to be higher than was
all theestablished.
cross loadings Basedwithon theconstructs.
other discriminant validitydiscriminant
Therefore, assessment
validity was established. Based on the discriminant validity assessment through confidence
through HTMT, all the values were found to be below 0.85; additionally, the HTMT, all
interval
the valuesvalue
werewas
found low to(2.5%)
be below based
0.85;onadditionally,
the confidence interval upinterval
the confidence (97.5%)value
columns, and
was low
all thebased
(2.5%) HTMT inferences
on the confidence were found
interval to be significantly
up (97.5%) columns, and different
all the HTMTfrominferences
1. Thus,
discriminant
were found to validity was established
be significantly different between thesediscriminant
from 1. Thus, reflective constructs. Lastly,
validity was all of the
established
VIF values
between were
these below 2,constructs.
reflective and thus itLastly,
was concluded
all of the that no collinearity
VIF values were belowissues2, were found
and thus it
in this
was model. that
concluded Therefore, the analysis
no collinearity issuescontinued
were found with themodel.
in this structural model the
Therefore, assessment.
analysis
Figure 2 displays
continued with thethe results model
structural of the overall structural
assessment. Figuremodel assessment.
2 displays the results of the overall
structural model assessment.

Figure2.2.Structural
Figure Structuralmodel
modelassessment
assessmentresults.
results.

Structural model analysis was performed after conducting the validity, reliability, and
collinearity tests (VIF). A structural model coefficient for the relationships between the
constructs was then determined. Table 5 displays the t-value and p-value for the hypotheses
established in this study.
Risks 2022, 10, 86 12 of 17

Table 5. Results of path coefficient.

Hypotheses Relationships t-Value p-Value Decision

PERCEIVED RISK ->
H1 0.624 0.532 Not supported
ADOPTION
PERCEIVED VALUE ->
H2 16.293 0 Supported
ADOPTION
Control Variables
GENDER 2.709 0.007 Significant
AGE 2.864 0.004 Significant
EDUCATION 0.584 0.559 Not Significant
INCOME 0.157 0.876 Not Significant
INVESTMENT EXPERIENCE 1.108 0.268 Not Significant

The p-value obtained was below 0.5 and the t-value was above 1.96, indicating a
significant relationship between the variables tested. Based on the analysis, it was found
that perceived value had a significant influence on adoption while perceived risk, on
the other hand, was found to have no influence on adoption. The assessment of the
demographic factors (gender, age, education, income, and investment experience) which
were the control variables in this study is also presented in Table 5. Based on the results of
the analysis, gender and age were found to have a significant difference on cryptocurrency
adoption among the retail investors while education, income, and investment were found
not to have a significant difference. Table 6 presents the F2 , R2 , Q2 , and SRMR results of the
structural model assessment.

Table 6. F2 , R2 , Q2 , and SRMR results of the structural model assessment.

RELATIONSHIP F2 R2 Q2 SRMR
PERCEIVED RISK -> ADOPTION 0.002
PERCEIVED VALUE -> ADOPTION 1.116
GENDER -> ADOPTION 0.047
AGE -> ADOPTION 0.055 0.635 0.488 0.044
EDUCATION -> ADOPTION 0.002
INCOME -> ADOPTION 0
INVESTMENT EXPERIENCE -> ADOPTION 0.006

F2 was performed to examine the effect and the size of the path coefficient. Perceived
value (1.116) was found to have a large effect size. In contrast, perceived risk (0.002), gender
(0.047), age (0.055), education (0.002), and investment experience (0.006) all had a small
effect size. Meanwhile, income (0) was found to have no effect size on the path coefficient.
The R2 value in this model was 0.635, indicating that the independent variables can explain
the dependent variable by 63.5%, which is interpreted to be between the moderate and
the substantial value. The Q2 value was 0.488 which is a large value, indicating higher
predictive precision. Additionally, the SRMR value obtained was 0.044.
The findings showed that perceived value had a significant influence on adoption,
while perceived risk had no influence on adoption. The results suggest that investors recog-
nize the value of cryptocurrency investments and not the risk. Perceived value was found
to have a positive influence on cryptocurrency investment. Retail investors are drawn to
cryptocurrencies as an investment option because of their attractive characteristics. Briere
et al. (2015) highlighted the key features of cryptocurrencies that make them exception-
ally attractive among investors including the high market volatility, high average return,
accessibility even on weekends, and low correlation with traditional assets which are all
characteristics that have major diversification advantages. This is supported by Lee et al.
(2018) who mentioned that cryptocurrency has also been highlighted in many studies for
their diversification benefits. Despite the many advantages of cryptocurrency investment,
there is also an equal amount of risk associated with cryptocurrency investment. The
findings of this study regarding financial literacy among Malaysian retail investors which
Risks 2022, 10, 86 13 of 17

revealed that 48.82% of the respondents reported their willingness to allocate more than
20% of their portfolio into cryptocurrency should raise concern. This willingness could
be due to the investors’ expectation that cryptocurrency investments would skyrocket
eventually, as well as their fear of missing out (FOMO) if cryptocurrency prices were to
skyrocket. Hence, this study contributes to the consumer behavior theory by highlighting
Malaysian retail investors’ perceived value over risk in cryptocurrency investment.
The conclusion of this study regarding perceived risk is consistent with Mendoza-Tello
et al. (2018) and Arias-Oliva et al. (2019) who both concluded that perceived risk had no
influence on cryptocurrency investment adoption. Arias-Oliva et al. (2019) justified that this
could be because most respondents regarded the danger associated with cryptocurrencies
to be relatively low. Additionally, it could be argued that as a result of the extensive notion
that retail investors lack financial literacy and investment knowledge, some retail investors
may be completely unaware of the risk that they might be exposed to. As claimed by Weber
and Milliman (1997), consumers who have low perceived risk of the behavior are likely to
have a more positive attitude toward the behavior. This could be a convincing argument
as cryptocurrency investors are often driven by the potential of earning a high rate of
return despite the associated risk of cryptocurrency investment. Zhao and Zhang (2021)
found that individuals who invested in cryptocurrencies had a much lower perceived risk
and a higher risk tolerance than those who did not. As 69.9% of the respondents of this
study reported having invested in cryptocurrencies, such a behavior aligns with Zhao and
Zhang’s (2021) findings, evidencing a low level of risk perception and higher level of risk
tolerance among the Malaysian retail investors.
The demographics of age and gender were found to have a significant influence among
adopters and potential adopters in this study. Most of the respondents who were already
investing in cryptocurrency in this study were male, at 74.4%. According to Faqih (2016),
women have a higher risk perception when it comes to adopting new technologies, and this
concern is likely to deter them from engaging in these activities. Considering that 74.4%
of the respondents in this study were men, this might justify the reason for the finding of
unsupported hypothesis for perceived risk. Moreover, women are most likely deterred
from cryptocurrency investment because of their low income, the market uncertainty and
volatility of cryptocurrency, and their lack of investment experience. In terms of age, most
of the respondents (31.3%) in this study were of the age between 25 and 34 years old
and belonged to Generation Y. In contrast, only a small number of the respondents at
14.2% belonged to the Baby Boomers category, whose age range were 55 years old and
above. Fietkiewicz et al. (2016) argued that different generations have varying levels
of technology adoption and acceptance. Various assumptions concerning generational
acceptance of technology have been asserted in the literature, where it is claimed that
the different perspectives of the different generations combined with the digital divide
have prevented older generations from accepting and adopting modern technologies. This
assumption is relevant since the majority of the retail investors in this study were from
Generations Y and Z who are deemed to have a high level of technological awareness.
Conversely, income, education, and investment experience were found to be insignifi-
cant in relation to cryptocurrency investment adoption. This suggests that the demograph-
ics of income, education, and investment experience would not result in any significant
difference among retail investors in Malaysia that would influence their intention to adopt
cryptocurrency as an investment. This finding affirms the results of the descriptive statistics
presented in Table 2. The variable of income was found to be insignificant, and this could
be attributed to the nature of cryptocurrency investment where cryptocurrency can be
acquired in fractions depending on the retail investors’ buying power. In addition, there is
no capital gains tax in Malaysia; thus, any income earned from the trading of cryptocur-
rencies would not be taxed. Next, education was also found to be insignificant, and this
could be attributed to retail investors having a “non-investment” type of education (Grable
2000). This demonstrates that, despite having a high level of education, retail investors
are not necessarily well-versed in investment-related matters. According to Nurbarani
Risks 2022, 10, 86 14 of 17

and Soepriyanto (2022), findings indicate that more experienced individuals, especially
those who hold more high-risk sophisticated investment products, are more likely to invest
in cryptocurrencies. However, this was not the case in this study. Arguably, it could be
rationalized that as cryptocurrency investment is relatively new in Malaysia, most retail
investors are probably adopting cryptocurrency investment out of curiosity rather than out
of their sophisticated knowledge of crypto investment.

5. Implications and Conclusions

5.1. Theoretical and Practical Implications
This study has examined perceptions of risk and value along with the demographic
factors (gender, age, income, education, and investment experience) as control variables
in relation to their influence on cryptocurrency adoption among Malaysian investors.
The results of this research indicate that Malaysian retail investors consider the value of
cryptocurrency investments and not its risk when it comes to adopting cryptocurrency
investment. The findings of this study provide better understanding and offer a new
perspective on Malaysian investors’ decision-making process with regard to this new
emerging cryptocurrency investment. A significant theoretical contribution of this work
is the development of investment intention factors for analyzing the investment decision-
making process of Malaysian retail investors from a consumer behavior’s viewpoint. Many
prior studies have examined the variables affecting cryptocurrency investment, but few
have considered how an investor would approach this decision-making process from a
consumer standpoint. To the authors’ knowledge, this is the first study to employ consumer
behavior theory to understand retail investors in the context of cryptocurrency investment.
By understanding investors’ adoption behaviors, policymakers would be better able
to determine the need for cryptocurrency regulations. Policymakers and regulators can
develop policies accordingly by avoiding over-regulating or under-regulating. By over-
regulating, Malaysia risks being left behind in terms of new technologies and innovation
that could improve the current financial sector. At this early adopter stage, over-regulation
through tax burdens, strict licensing requirements, and foreign exchange controls may
suffocate innovation efforts. However, if Malaysia fails to regulate, investors will become
victims of financial fraud, crime, and money laundering, which could lead to significant
losses to consumers, businesses, and investors. This could put Malaysia’s financial stability
at risk. As a result, regulators and policymakers must design policies that protect retail
investors while also fostering the digitization of the financial sector.
To achieve Malaysia’s objective of enhancing the development of digital infrastructure
and services in accordance with the 12th Malaysian Plan, efficient, effective, and transparent
policies regarding cryptocurrency need to be established. In this respect, the findings of
this study could help policymakers by giving them better understanding and valuable
information regarding retail investors’ perceptions of cryptocurrency investment. Based on
the findings, the majority of the respondents were male and of a relatively young age. It
could be suggested that many of the retail investors in this study are unaware of the risks
associated with cryptocurrency investment and are more intrigued by this new emerging
investment product. For this reason, regulators should develop policies to protect young
and inquisitive investors, as they are Malaysia’s future. At this stage, financial literacy
awareness for the general population is required.

5.2. Limitations and Recommendations

The study involved a small sample size of 211 respondents and only focused on retail
investors. Thus, future research may want to consider including institutional investors
and other groups of investors. Additionally, this study only examined the general concept
of risk and value. Future researchers may want to expand on this by investigating how
cryptocurrency investors perceive risk and value in their investments.
Risks 2022, 10, 86 15 of 17

5.3. Conclusions
This study adds significantly to the body of knowledge on consumer behavior re-
search by examining perceptions of retail investors by looking into perceived risk and
perceived value. This study has examined perceptions of risk and value along with the
control variables of demographic factors (gender, age, income, education, and investment
experience) in relation to their influence on cryptocurrency adoption among Malaysian
investors. Based on the finding’s perceived value was found to have an influence on
adoption, while perceived risk had no influence on adoption. The findings shed light
on the emerging cryptocurrency investment market in Malaysia for policymakers and
regulators by providing greater understanding of Malaysian retail investors’ perception.
It is concluded that there is a need for government regulation since perceived risk was
found to have no influence on cryptocurrency investment in this study. This finding raises
concern for Malaysian retail investors since most of the respondents who reported having
invested in cryptocurrencies were millennials who lacked knowledge in crypto investment
and are therefore at risk of being victimized by cybercriminals and scammers.

Author Contributions: Conceptualization, S.S.; methodology, S.S.; software, S.S.; validation, S.S.,
T.S.B. and S.W.; formal analysis, S.S.; investigation, S.S.; resources, S.S.; data curation, S.S.; writing—
original draft preparation, S.S.; writing—review and editing, S.W. and T.S.B.; visualization, T.S.B.
and S.W.; supervision, T.S.B. and S.W.; project administration, T.S.B.; funding acquisition, T.S.B. All
authors have read and agreed to the published version of the manuscript.
Funding: This research and APC was funded by the Fundamental Research Grant Scheme (FRGS/1/
2019/SS01/MMU/03/21), provided by the Ministry of Higher Education Malaysia. Grant No.:
MMUE/190037.02.
Institutional Review Board Statement: The study was conducted in accordance with the Declaration
of Helsinki and ethics approved by Research Ethics Committee (REC) from Technology Transfer
Office (TTO), Multimedia University. Approval number [EA3202021].
Informed Consent Statement: Informed consent was obtained from all subjects involved in the
study.
Data Availability Statement: Data available upon request.
Acknowledgments: The researchers would like to express their gratitude to the Ministry of Higher
Education, Malaysia for funding this research and publication.
Conflicts of Interest: The authors declare no conflict of interest.

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